Metropolitan Bank Holding Corp, which is used by cryptocurrency companies and investment firms for wire transfers and deposits, has ceased all cryptocurrency-related international wires effective immediately, Fortune has learned.
A Metropolitan customer confirmed to Fortune that his investment firm was notified on Thursday morning that the bank was “ceasing all international crypto-related wire transfers to and from” it effective immediately. The reason for the shutdown, according to the customer, was because the bank could not verify the compliance of international wire transfers for cryptocurrency accounts. The move is alleged to be a response to an incident of international fraud associated with one of the bank’s clients. The bank denied this claim.
A Metropolitan Bank representative said in a statement to Fortune that it "does not accept cryptocurrency-related wire transfers from non-U.S. entities." Additionally, the bank sent a reminder to customers of its policy in response to "certain cryptocurrency-related wire transfers from non-U.S. entities that were sent to the Bank in error." In other words, the bank claims it was not aware of the cryptocurrency-related international wires until last week.
Fortune reviewed a customer's documentation of wires from a non-U.S.-based entity to its U.S.-based cryptocurrency-only fund that includes the word "Crypto" in the bank account's name. The customer added that he had previously worked with the bank on numerous occasions to ensure the international wires went through. Fortune is awaiting the bank's response to this claim.
Digital currency wallet Coinbase is among the companies that use Metropolitan for wire transfers, deposits, and its Shift bitcoin debit card.
Metropolitan said it has allowed its customers to access the funds they have in the bank, but reiterated that its policy is not to accept cryptocurrency-related international wire transfers.
The bank’s abrupt decision is important for several reasons.
First, Metropolitan has been growing rapidly following its November IPO, in part because of its friendly stance toward the fast-growing cryptocurrency market. Some even refer to it as “The Bitcoin Bank.” Its move to cease crypto-related international wires has the potential to curb its rapid growth in the space.
Second, non-U.S.-based funds who exclusively manage international investors’ money via Metropolitan Bank will potentially be forced to freeze or completely shutter operations.
And third, Metropolitan Bank’s fast-growing stock could take a significant hit while its management team is still in the post-IPO lock-up period.
It’s worth noting the bank’s cryptocurrency customers may have alternative banks that cater to their needs, such as Silvergate Bank or Cross River Bank. In other words, a bank diversification strategy is usually employed to reduce risk in this type of scenario. (In response to a Fortune inquiry, Coinbase said it does not comment on its banking relationships.)
This story has been updated with a comment from Metropolitan Bank.